Okay.

Good evening.

And welcome and thank you for coming to our annual community budget workshop.

This workshop is designed to provide the community with information about the city's budget, both operating and capital.

Serve as a forum for you to ask questions of city staff.

We have all of our department directors here tonight to assist in responding to your questions.

And the workshop is also intended to allow you to provide feedback into the budget development process as we work towards an adoption in uh June of 2025.

We understand your time is valuable and we appreciate you being here and spending time with us in person, especially tonight.

This workshop is also being recorded and will be posted online in the next few days so that those who weren't able to attend in person or watch on the live stream can watch it on Zoom later.

Thank you.

And now I would like to introduce our finance man our finance director, sorry, Carla, Carla Carvalod Graf.

I was trying to make sure that I didn't say the wrong Carla.

It's gonna be tricky.

So as City Manager Cunningham said, we want to welcome everyone to the 2025-2026 budget workshop.

Community participation is a critical part of the budget process.

And as Amy said, I'm the finance director for the City of Novato, and I'm also a fellow Novatoan.

With me tonight is our department head team, including our newest member, our assistant city manager, Carla Hanson, and next to her to my left is um city clerk Laura McDowell.

Next to me is City Manager Amy Cunningham.

And then to my right, we have interim public works director Tim Burke, uh community development director, Claire Hartman.

This is a mouthful, parks and recreation and community services director, Katie Gauntlet, and of course our chief of police, Jim Noggle.

They are um here to answer any questions about um their areas within the budget.

We will review revenue, our general fund forecasts, the budget development process, the operating budget as it stands for fiscal year 24 or 25, as we are currently in the budget assumption development phase of the operating budget.

And of course, the departments are working on their budgets or have worked on their budgets, and we are in the review process.

And then at that point, I'll turn it over to Tim Burke for the CIP um draft budget, and then we move to questions and answers and next steps.

So I wanted to start with an overview of revenue before we get into the nuts and bolts of the budget.

The city's major revenue streams are property tax and sales tax.

You may have seen this graphic previously as we've used it to show the comparison of the proportional share of property tax for the city of Novato to our fellow Novado agencies.

Novado gets 7%, 7 cents of each dollar.

And we're there on the slide in between other and the College of Marin, and there's simply nothing we can do to change that seven cents.

Um and the other agencies are like the Marin County Library, flood control, mosquito abatement, and there's a list of um smaller agencies.

Uh the reason that we are at the 7% and that that can't be changed is that many years ago in the 70s, uh property tax, the property tax rate was reduced by 19%.

And then proposition 13 lock Novato into the 7% rate going forward.

And then while property values increase, it's a slower growth area.

It's just incremental increases.

The other revenue stream I mentioned is sales tax.

There um, these are the rates that are effective April 1st, 2025.

With the passage of Measure M in November, the city's sales tax rate will be 9.25%.

And as you can see from the chart, several other cities in Sonoma and Marin County have been listed.

And our sales tax rate is comparable to many of our neighbors.

And there are there are three cities that have a uh rate set at 8.25%.

This was reduced from the four cities as a mill valley increased from eight and a quarter to nine and a quarter.

And um all the rates on this chart are effective April 1st.

So the portion of the locally controlled sales tax that Novato has is 2%.

We are showing this in two slices of this pie chart.

What we are get what we were getting prior to Measure M, which is the one and a quarter percent, the red uh slice of the pie, and then the measure M slice is a three-quarter cent, and that's the gray slice of the pie.

The state cap is nine and a quarter.

Sales tax can be higher than nine and a quarter for some special district taxes, and as you saw on the previous slide, a couple of neighboring cities have gone past the cap.

But us taking up our space in that cap allows us to keep funding local to ensure that city services to the community come out of the suppressed state that they have been in, although we recognize it will take us a while to rebuild.

To give you the financial picture, we have updated the general fund forecast and basically the general fund is where our operating budget resides.

We work with a consultant to do this and have had this forecast in place for the last two years.

This slide reflects the forecast without Measure M.

The way to view this slide is that the blue bars are revenue, the orange bars are expenditures, and the red line tracks the surplus or deficit.

This slide shows the systemic deficit that Novato had before the passage of Measure M.

And you can see that from 2025-26, fiscal year 25-26 through fiscal year 2930, the deficit bounces around 3.4 million to 3.8 million.

The deficit, again, not one time, it was ongoing, and even with cost containment, we would not have been able to fund all of the costs necessary to fund our operating budget.

This is the forecast with Measure M.

Fiscal year 24-25 is still forecasted to come in with a deficit, even though there are some Measure M monies that will come in in Q in the fourth quarter.

And the chart that I showed previously showed Measure M before Measure M, all of the out years had a deficit.

But now that we have Measure M, you can see starting in 2526 that the forecast shows a surplus, but it doesn't show a surplus of 10 million, which is what Measure M will bring in.

In 2526, you see a surplus of 6.8 million.